officials who petitioned state representatives for assistance
regarding challenges to property values from retailers are one step
closer to receiving clarity for the situation.
State Sen. Duey
Stroebel helped draft legislation to be presented in the next
Legislative session that would clarify how assessors can value
commercial properties in their jurisdictions. The drafted language
requires real property to be assessed at “its highest and best use”
and determines the assessor will establish the value of leased or
rented locations based on the payments the owner will receive.
“This is really,
just to say, to allow our assessors to utilize the lease or the
income stream that comes from the property in order to make a value
determination or at least have a chance to factor that in,” Stroebel
West Bend has
been acutely aware of this issue, as well as the issue of dark
stores, since one retailer, Walgreens, is challenging the city’s
assessment of its property where lease agreements are at the center
of the debate.
works with contractors to purchase properties in various locations
and construct brick-and- mortar stores to certain standards. They
will then establish lease agreements that cover the costs for the
property taxes and ancillary expenses such as rent, operating and
development costs. Company representatives argued their lease
agreements should not be factored in the assessment — effectively
lowering the assessment and subsequently the taxes they owe.
assessed two locations at $6.75 million and $5.7 million, but
company managers believed they should be assessed at $2.4 million,
per previous reporting from the Daily News.
legislation permits assessors to consider the stream of payments the
company derives from its operations.
“What we are
saying in Wisconsin is that you can look at income, you can look at
the leases because these very same properties you see, the Walgreens
that say it is only worth such and such amount because that is the
same as this vacant store down the street, they are both brick, the
same size and the same amount of land — they are two totally
different animals,” Stroebel said. “Those very same buildings, when
they sell them, they market them — here is the cash flow and they
apply a capitalization rate to that cash flow to determine a value.”
such as Menards and Shopko want to alter the method by which their
stores are valued, claiming their properties should be valued when
they are vacant instead of when they are operating. But city
officials, including Assessor Jeff Yoder, argue they are not
comparable situations. Both parties are locked into an ongoing legal
The city could
lose about $150,000 in tax revenue if these large retailers have
their way, but the expenses continue to be a factor. The money must
be accounted for in another way and many are beginning to shift the
burden to residential property owners.
“I would say it
is a start,” Yoder said when asked about the proposed legislation.
“It still has to clarify how the assessors will assess properties
and there is also the Wisconsin Properties Assessment Manual, that
is the other part we follow and hopefully those two will support one
another and make it clear.”
It may not end
the lawsuits anytime soon, however, because retailers may challenge
the legislation if it even passes — arguing it is an incorrect
method to value property.
“That is to be
determined,” Yoder said when asked if the legislation will end the
dispute in the courts. “I don’t know. Nobody knows or has a crystal
ball how this will affect it. It could definitely have an impact on
them because the lawyers will use this legislation in the fight. I
am sure it could be challenged.”
“I am not an
attorney to say that it overturns it (court cases), but right now
(assessors) are precluded from using the cash flow to evaluate the
properties,” he said.
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